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1. The traditional business model of accounting is inadequate for governments and not-for-profit organizations primarily because businesses differ

1. The traditional business model of accountingis inadequate for governments and not-for-profitorganizations primarily because businesses differ fromgovernments and not-for-profit organizations in thata. They have different missionsb. They have fewer assetsc. Their assets are intangibled. Taxes are a major expenditure of businesses3. The primary objective of a not-for-profit organizationor a government is toa. Maximize revenuesb. Minimize expendituresc. Provide services to constituentsd. All of the above4. In governments, in contrast to businesses,a. Expenditures are driven mainly by the ability of theentity to raise revenuesb. The amount of revenues collected is a signal of thedemand for servicesc. There may not be a direct relationship between revenuesraised and the demand for the entity’s servicesd. The amount of expenditures is independent of theamount of revenues collected5. The organization responsible for setting accountingstandards for state and local governments is thea. FASBb. GASBc. FASABd. AICPA7. Governments differ from businesses in that theya. Do not raise capital in the financial marketsb. Do not engage in transactions in which they ‘‘sell’’goods or servicesc. Are not required to prepare annual financial reportsd. Do not issue common stock8. Interperiod equity refers to a condition wherebya. Total tax revenues are approximately the same fromyear to yearb. Taxes are distributed fairly among all taxpayersregardless of income levelc. Current-year revenues are sufficient to pay forcurrent-year servicesd. Current-year revenues cover both operating andcapital expenditures

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